Remember, The Taxpayer Advocate Is A Source For You and Your Clients

national-taxpayer-advocate-fbar-ovdp-300x186For those tax professionals who provide tax representation services, you will eventually have cases that seem too small to help.  Maybe their issue is not complex enough, the amount of taxes involved are rather small….usually to justify your fee.  As ethical professionals, we always evaluate the cost and benefits our clients incur working with us.

Worse is that case that you thought was a “no-brainer” issue to resolve, but the IRS bureaucracy bogs it down.  Simple issues like they just need to actually read your response, the IRS lost the supporting documents you sent in, or the IRS employee is not responding to your requests.  When possible, these issues should be directed to the supervisor of any directly assigned IRS employee on your client’s case.  However, these are more common when dealing with correspondence exams, CP2000 type issues, or ACS Collections, where a specific person may not be assigned or easily reached.

So what is a tax professional to do?  Let the IRS run up client fees with needless delays?  Not charge the client for the time related to managing IRS delays?

Well, there is a better answer.  The Taxpayer Advocate can usually resolve these delays.  You can request help from the Taxpayer Advocate by filing a Form 911.

Tip #1: When completing the form,  detail how your client’s case meets the Taxpayer Advocate’s criteria for cases they will accept.  The Taxpayer Advocate case criteria is detailed in the Internal Revenue Manual Section 13.1.7.2.  It provides for 9 criteria, any one of which a taxpayer’s case can meet for it to be accepted.  Each of the 9 criteria are grouped into 4 basic areas, which are:

  1. Economic Burden. Economic burden cases are those involving a financial difficulty to the taxpayer: an IRS action or inaction has caused or will cause negative financial consequences or have a long-term adverse impact on the taxpayer.
    • Criteria 1: The taxpayer is experiencing economic harm or is about to suffer economic harm.
    • Criteria 2: The taxpayer is facing an immediate threat of adverse action.
    • Criteria 3: The taxpayer will incur significant costs if relief is not granted (including fees for professional representation).
    • Criteria 4: The taxpayer will suffer irreparable injury or long-term adverse impact if relief is not granted.
  2. Systemic Burden. Systemic burden cases are those in which an IRS process, system, or procedure has failed to operate as intended, and as a result the IRS has failed to timely respond to or resolve a taxpayer issue.
    • Criteria 5: The taxpayer has experienced a delay of more than 30 days to resolve a tax account problem.
    • Criteria 6: The taxpayer has not received a response or resolution to the problem or inquiry by the date promised.
    • Criteria 7: A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer’s problem or dispute within the IRS.
  3. Best Interest of the Taxpayer. TAS acceptance of these cases will help ensure that taxpayers receive fair and equitable treatment and that their rights as taxpayers are protected.
    • Criteria 8: The manner in which the tax laws are being administered raises considerations of equity, or has impaired or will impair the taxpayer’s rights.
  4. Public Policy. Acceptance of cases into TAS under this category will be determined by the National Taxpayer Advocate and will generally be based on a unique set of circumstances warranting assistance to certain taxpayers.
    • Criteria 9. The National Taxpayer Advocate determines compelling public policy warrants assistance to an individual or group of taxpayers. It is not difficult to meet one or more of these criteria, but

While the 9 criteria give a variety of ways a case can qualify, realize that those under economic burden and systemic burden tend to be more likely to get TAS to provide assistance.  Just look at some of the qualifying criteria for systemic burden…delays of 30 days to resolve a tax matter or not getting a response by the date promised.  Heck…30 day delays are hardly uncommon.

Under economic burden, one criteria is that the taxpayer will incur significant cost if relief is not granted.  Having a tax professional unnecessarily following up with the IRS due to delays or file an appeal for a rather straight forward CP2000 issue would likely require unnecessary costs to the taxpayer.

Tip #2:  Present the issue to the Taxpayer Advocate to resolve the case. Remember these are typically easy resolutions and not complex cases.  So making this case easy to resolve will improve your chances of success.  So providing all supporting documents, organized and cross reference where appropriate, and with a straightforward explanation are critical.

So now you have gotten your case accepted by the Taxpayer Advocate.  You have also provided strong and clear documentation as to how this case is to be resolved.  What next?  You will probably have to follow up with the Taxpayer Advocate as well, but usually they respond and provide updates or request additional information if needed.  For the small, straightforward cases that get bogged down in IRS bureaucracy, resolution usually doesn’t take long.

So hopefully you now have an option on how to resolve those small cases that seem to just not go away.

For more of tax tips and ideas, come to the Tax Alliance Conference in Plano, TX June 6-8 of 2017.

How to Communicate with the IRS

As tax professionals, we often have to contact the IRS regarding a client’s tax issue. For many of us, it would seem second nature to pick up the phone and the IRS employee assigned to the case or at least the hotline. Unfortunately, verbal conversations by themselves can put your client at a disadvantage. Take this dialogue for example:

Revenue Officer: Hello, this is Revenue Officer Al Levy.

Tax Professional: Yes, Mr. Levy. I am contacting you regarding your request for financial information from my client Robin Banks.

Revenue Officer: Yes.

Tax Professional: You’re setting a deadline of August 19th. However, we can’t meet that date. We will try for August 31st, but more likely it will be closer to September 15th. My client may have to have surgery and that may interrupt his ability to collect that information.

Revenue Officer: Well I need to close this case as soon as possible.

Tax Professional: I understand your expectations, but we need some flexibility on this time line.

Revenue Officer: Well, I’ll do what I can.

In a subsequent conversation with the Revenue Officer, he claims your client has been dragging the matter out because you missed the August 31st deadline you committed to. His notes in the system document that you called and committed to August 31st to provide Form 433 information. You are now in a he said she said situation and the IRS typically wins those.

So what is your alternative? Here are some tips:

  • When possible, fax a response to the IRS. And don’t just use any fax. Use the electronic or internet based faxes. When you fax from an e-fax, not only does it have confirmation that it was received, but the entire fax is saved. So it shows what documents were included in the fax.
  • If you mail documents to the IRS, send it certified return receipt. Also, paginate all pages of the set of documents, such as 1 of 10, 2 of 10, etc. Finally, put the USPS tracking number on each page of the documents. My experience is that when this is done, few documents ever get lost.
  • If a phone call to the IRS is needed, follow up with an e-fax documenting what was discussed and other details. This will typically get included in the administrative file.

By following these tips, you better protect your client from frivolous claims that documents were never received, lack of follow up by the client or their representative, or other misrepresented claims. And if such claims are made, you have the documentation to counter the claim.

For more of tax tips and ideas, come to the Tax Alliance Conference in Plano, TX, June 6-8, 2017.